Area candidates say US economy needs better fix

By Brian McNeill

Published: October 7, 2008

As stocks plummeted for the second straight day Tuesday despite a $700 billion bailout of the financial industry, several Charlottesville-area congressional candidates said much more must be done to bolster the struggling economy.

“There’s no question the bailout didn’t accomplish what it was supposed to do — staunch the bleeding of investor confidence,” said Democrat Tom Perriello of Ivy, who is challenging six-term incumbent U.S. Rep. Virgil H. Goode Jr., R-Rocky Mount.

The next administration — either led by Republican John McCain or Democrat Barack Obama — will need to enact with Congress a more permanent economic solution, Perriello said. Such a fix, he said, should require more accountability for Wall Street and government regulators, strengthen U.S. currency, invest in the nation’s aging infrastructure, and move toward a balanced federal budget. If no comprehensive economic reform is taken, he said, the nation could be feasibly faced with a $1 trillion bailout as often as every two years.

“We’ve gone from talking about recession to talking about depression,” he said. “We’ve gone from talking about billions to talking about trillions. And we’ve gone from talking about home foreclosures to bank closures … We need serious leadership.”

Perriello said he supported last week’s bailout, but added that it was a rush job and flawed. It might help prevent a total economic meltdown and carry the nation through the holiday season, but lawmakers will most likely need to revisit the issue in 2009, he said.

Goode, who voted against the bailout package twice, did not return a call for comment Tuesday. In a constituent newsletter sent out Monday, Goode explained his opposition to the legislation, saying it would add too much to the nation’s existing mountain of debt. It might also lead to American taxpayer money being spent on buying bad debt from foreign institutions, he said. Constituents seemed opposed the package, he said, adding that the bill’s final version was loaded with “questionable” pork barrel spending.

“I appreciated all the calls, letter and e-mails from the Fifth District residents, expressing opinions on the bailout bill,” Goode wrote. “When the original bill was under consideration, the communications ran 80 to 90 percent against. After that bill was defeated, they were about 55 to 60 percent against, but once the Senate added $150 billion more to the package, including some questionable tax breaks for wooden arrowheads and Puerto Rican rum, opposition swelled again.”

The 5th District includes the city of Charlottesville and the counties of Albemarle, Buckingham, Fluvanna, Greene and Nelson and many more localities stretching down to Southside.

Former Gov. Jim Gilmore, a Republican, is running against former Gov. Mark R. Warner, a Democrat, to replace retiring U.S. Sen. John W. Warner, R-Alexandria, in the Senate. Gilmore said he doubts the bailout is working and, if elected, he would try to undo the package if it could be done without “upsetting the apple cart too much.” He opposed the bailout because he says it relies on taxpayer money to shore up financial institutions that made poor business decisions.

“I don’t know if the bailout is going to work. I don’t think it is,” he said. “It was introduced and passed very quick and they did not consider alternatives … It was certainly no panacea.”

Gilmore said he suspects the economy will improve on its own, as many American families and businesses still have valuable collateral and will eventually have access to credit. “The ship will right itself,” he said.

Warner did not return a call for comment Tuesday. In a Friday debate against Gilmore in Roanoke, however, Warner said the bailout was not perfect but was necessary to get the credit markets moving again and prevent massive layoffs and overall economic calamity. “We had to act,” he said. “The president said it. Sen. McCain said it. Both our United States senators supported this. This was a time we need to go forward in a way that would actually protect the taxpayer.”

The bailout package, Warner said, is “just the first step.” Next, he said, Congress must implement regulatory reform to prevent such risky financial packages in the future and must approve an overall plan to jump start the nation’s economy. Warner has said that such a plan should include things such as affordable health care, rural broadband and investment in infrastructure.

U.S. Rep. Eric I. Cantor, a Henrico County Republican running for re-election on Nov. 4, voted in favor of the bailout package. He supported the bill after he successfully won concessions that required financial institutions to help foot the bill, added protections for taxpayers and prevented CEOs from getting golden parachutes financed by taxpayer money, he said.

Cantor said he is waiting to see if it actually boosts the economy. If not, he said, Congress may have to act again.

“Obviously, we’ll wait to see what happens,” he said. “At any point, we have to be ready to assist if necessary.”

Cantor said he hopes that the bailout removes the financial institutions’ “toxic assets” that are keeping investors away. Once the firms’ assets are more solid, he expects confidence to return to the market.

Apart from the bailout, Cantor said, Congress should aim to improve the economy by working to end the nation’s dependence on foreign oil, modernize Wall Street, and make health care more affordable through tax credits and by allowing companies to pool together for lower rates.

Cantor represents the 7th District, which includes the counties of Madison, Orange and Louisa.

Cantor’s opponent, Democrat Anita Hartke of Culpeper, said she would have supported the bailout package, but said Cantor did not fight for sufficient protection of taxpayers and homeowners. “There’s no reason why you can’t come to an agreement with people like Nancy Pelosi to have some safeguards for people and businesses,” she said.

Now that the bailout is being implemented, Hartke said, Congress needs to backtrack and add protections against predatory lending practices, payday lending, credit card debt and home foreclosure.